"Generalizing" Intellectual Property Law

First Things First, On New Year's eve, Here’s Wishing All The Readers a Very Happy and Prosperous New Year!

No, this is not another long-winding post on patents; this is our mission statement for the coming Year. The mission statement is the product of my experience in Indian Courts in the last year or so. If I had to capture in a nutshell my lesson from the last year, it would be this:

“Patent law is law; it is not patent science or patent technology!”

I think this applies broadly to intellectual property law as a whole. One prevailing opinion among general practitioners of law, that I have interacted with, about IP lawyers is that the latter have successfully alienated intellectual property law from the “mainstream”. 

Intellectual property lawyers, in the eyes of a cross-section of the general legal fraternity, consider themselves as an entirely different breed which expects “special treatment” from Indian Courts. Not just that, intellectual property lawyers are not considered to be conversant with “procedure” i.e. Code of Civil Procedure, known as CPR in the UK (which for many, is an understatement...)

Regardless of this opinion being a verity or a myth, I think it deserves serious introspection on the part of the IP fraternity. There is absolutely no doubt that the very nature of IP requires acknowledgment that one has to approach the subject differently. That said, IP law is law at the end of the day, notwithstanding the fact that certain forms of IP relate to technology. 

This means:

1. Settled canons of statutory interpretation and principles of equity cannot be given a go by; at best, they can be suitably adapted.

2. IP civil enforcement actions are governed by the Code of Civil Procedure, so there’s no escaping knowing the CPC well (!)

3. IP laws, for all the niche treatment they are given as laws which source their roots to TRIPS, are still subservient to the Supreme law of the land- the Constitution (obvious though it sounds, point of research may be?).

Therefore, there is a need to “generalize” IP because an IP lawyer, whose fundamentals in general concepts of law are weak and whose grasp of procedure is shaky, is no good. He might as well shove all his vaunted knowledge of IP into the wheelie bin, if he does not know the requirements of the forum. I say this because from what little I have seen, catering to the demands and sensibilities of the forum is half the battle won. 

From a practical point of view, Indian Courts, barring rare exceptions, have very little patience for all the “gyaan” (“knowledge”) that an IP lawyer is waiting to impart (ahem..spout and spew) to the Court by way of arguments. 

Consequently, it is critical for an IP lawyer to know how to fashion his case and present it for the (Indian) Court’s digestion. This is not possible until he “blends in” with the general legal fraternity, and talks to them in a language they understand. 

It is precisely in this direction that our efforts on this blog will be directed henceforth. “Generalizing IP” is our mission statement, atleast for now. To this end, we will try and present our analyses in as “general” a manner as possible, without sacrificing the nuances and subtleties of IP at the altar of “generalization”. 

Since IP law, like any other branch of law, is a cow that can be tied to any tree, we will attempt to tie IP law to Constitution, conventional proprietorial jurisprudence and torts (and therefore equity).

On a personal note, Constitutional law being my first love, I shall personally strive to connect IP law with the Constitution. (And sometimes, I may write on Constitution only to provide our “general” readers a respite from IP)

Importantly, we will discuss litigation procedure rigorously and explain its application to IP suits, as much as possible. It goes without saying that our readers are more than welcome to share with us their opinions and insights on generalizing IP.

We hope that in doing so, we would have contributed to increasing IP awareness among laypersons...and we would have also contributed our mite to dispelling the myth that IP lawyers are not on par with general practitioners when it comes to their knowledge of procedure.

For now, let’s welcome the New Year with prayers and the hope that it brings peace, enlightenment and prosperity in all our lives on all fronts!

An Old Pharma Decision: Bombay High Court (1968) – III

Continuing our discussion from the last 2 posts, in this post the remaining grounds of invalidity have been discussed. 

B. Want of Novelty

As stated in the last post, the essential embodiment of the plaintiffs’ invention did not lie in a method of desulphurisation of sulphonylthioureas, it lay in selecting and combining certain base materials which upon reaction would throw up a product with hypoglycaemic results, sans the side effects in the prior art. 

In the prior art, amino-sulphonamides were used in anti-diabetic treatment, however the groups/radicals attached to either ends of amino-sulphonamides caused certain undesirable effects. The plaintiffs’ invention was devoid of these harmful effects owing to the limitation on the maximum number of carbon atoms which R and R1 could contain. In other words, identification and use of R and R1 constituted the inventive step in the plaintiffs’ invention, which was unknown to the state of art prior to the plaintiffs’ disclosure.

C. Lack of Inventive Step

This brings us to the question of non-obviousness; the Court’s observations on this issue are, for me, the most significant contribution of the judgment to Indian patent jurisprudence. The Court rightly recast the issue of non-obviousness in the case as one involving a question of “production of new substances by known methods from known materials, which can be supported from the point of view of subject-matter”. 

This was apt because the inventive step of the plaintiffs’ invention lay in selecting the right materials from available materials to produce compounds with desired characteristics. The Court recalled the test laid down in May & Baker Ltd. and Ciba Ltd., (1948) 65 RPC 255, which was as follows:

(i) An invention consisting of the production of new substance from known materials by known methods cannot be held to possess subject-matter, merely on the ground that the substances produced are new, for the substances produced may serve no useful purpose, in which case the inventor will have contributed nothing to the common stock of useful knowledge (the methods and materials employed being already known) or of useful materials (the substances produced being ex hypothesis, useless).

(ii) Such an invention may, however be held to possess subject-matter provided the substances produced are not only new but useful, though this is subject to the qualification that the substances produced must be truly new, as opposed to being merely additional members of a known series (such as the homologues) and that their useful qualities must be the inventor's own discovery as opposed to mere verification by him of previous predictions.

(iii) Even where an invention consists of the production of further members of a known series whose useful attributes have already been described or predicted, it may possess sufficient subject-matter to support a valid patent provided the somewhat stringent conditions prescribed by Maugham J., as he then was, in I. G. Farbenindustrie A. G.'s Patents, (1930) 47 RPC 289 as essential to the validity of a selection patent are satisfied, i. e. the patent must be based upon on some substantial advantage to be gained from the use of the selected members of the known series or family of substances, the whole) of the selected members must possess this advantage, and this advantage must be peculiar (or substantially peculiar) to the selected group

The Court again cited Halsbury, which postulates thus:

An invention usually involves three stages:

(1) the definition of the problem to be solved, or the difficulty to be overcome,

(2) the choice of the general principle to be applied in solving the problem overcoming the difficulty; and

(3) the choice of the particular means to be used. 

The merit in any one of these stages, or in the whole combined, may support the invention, and it is, therefore, probably more important to consider the advance in knowledge due to the inventor rather than to examine in detail the variations from the former product.

In this case, the inventive step was the replacement of radicals attached to amino-sulphonamides (such as carbutamide) by a methyl group, resulting in Tolbutamide. On the ingenuity of the inventive step, the Court’s views are of critical importance:

“The substitution of CH. 3 in the para position for NH. 2 was the inventive step. It was a novel idea and the plaintiffs' patent therefore embodies a new and useful composition of matter, or at any rate, a new and useful improvement in it. It was not a thing which just any person working in this field would try, but it required extensive research. As observed in the Irish judgment to which I will refer later on, Courts of law must guard against the common human failing of being wise after the event in regarding something that has been discovered by research as obvious.”

The so-called “hindsight bias” which the US Supremes had warned against in KSR v. Teleflex in 2007, the Bombay High Court had already cautioned against in 1968. Commenting further on the inventive step, the Court held:

“...though sulphonylureas were known prior to the invention in suit, it was not known that if they were activated by certain radicals they would have blood sugar reducing properties. The use of sulphonyl-ureas with radicals on either side with certain limitations in regard to Carbon atoms so as to obtain hypoglycaemic properties would itself be an addition to the “common stock of useful knowledge” within the May & Baker's case, (1948) 65 RPC 255”

On the basis of the above reasoning, the Court dismissed the ground of obviousness.

As for the ground of lack of utility/usefulness of the invention, I leave it for the readers to read for themselves some very insightful observations of the Court in holding the invention useful, despite the patent taking within its ambit an unknown number of unknown compounds which were identified/characterised on the basis of the base materials used and the properties exhibited.

Thoughts

More than anything, the judgment of the Bombay High Court is a case in point to show that independence of mind and “vertebracy” are two essential prerequisites if Indian Courts are to develop their own principles and doctrines.  I say this because, unlike this decision, the fear of the unknown is palpable in most Indian decisions on patents, which I think, is the reason that most decisions are mere recapitulations of case laws from either sides of the Atlantic. 

Case laws can help Indian Courts only to the extent of equipping them with certain tools of adjudication, but application of those tools to the facts of a case is something Indian Courts have to do by themselves. Surrogacy in application of the mind simply does not and cannot work, particularly in a field which is highly contextual. 

Let’s hope Indian Courts draw inspiration from Justice Vimadalal's attempts to shape an Indian view on patents.

As The Year Ends.......

2010 comes to an end, and I recline on my armchair in hometown Trivandrum and think of the year gone by. It has been an interesting year, with seesaw changes in my professional life. On the minuses, what niggers me most is the inability to finish off my book on “Injunctions in IPR”, a work in progress now for the last 2 years. Like an engine that splutters at the last leg, im stuck on the designs chapter. So, that’s at the top of my resolutions for 2011.

On the plus side, the highpoint was appearing before the Standing Committee headed by Oscar Fernandes, M.P., that examined the Copyright Amendment Bill, 2010 and finally came out with its report at the fag end of this year. Boy, what an insight it has given me into the way policy is created and legal frameworks are sought to be overhauled.Different matter whether we need such an overhaul!!

The Committee Report is certainly voluminous and does consider the views of various stakeholders. It is however inconsistent and the inconsistency is revealed in the first few pages of the 118-page report. There were two important proposals when it came to vesting of rights with the authors of the work, if one were to quickly look back at the Amendment Bill. The first, to make the principal director and the producer joint owners of the copyright in a cinematograph film, and the second, to make the music director / lyricist joint owners of the sound recording along with the producer.

The report rejects the first and approves the second, applying patently inconsistent reasons. The premise is the same for both proposals – to vest rights with the creator as much as with the investor. Then how is it that the investor gets the entire rights for the cinematograph film except for the musical and literary works?

The reasons for the rejection and the approval definitely require closer scrutiny. The rejection of the principal director’s claims at p. 12 of the Report reveals the following reasons:

(i) the absence of an international or treaty practise to such effect;

(ii) the producer being the “kingpin who invests substantive money, raises finance through institution, utilizes persons/expertise and brings out a product i.e film”, he should be given the right to exploit the work;

 (iii) the ‘principal director’ being an undefined person and an ambiguously used term, should not be given the opportunity to take the partnership in a cinematograph film along with the producer without any liabiity/responsibility being assigned to the principal director;

(iv) as a matter of fact, “directors are earning a huge fee without any pressure whatsoever”;

(v) “even in Hollywood, fee is allowed and certain profit is shared under a system/agreement whereunder no equal partnership between the director and the producer is there. Such a system can exist in Indian cinema also”;

(vi) “the producer may not engage directors and may become director, script writer etc. himself”. (Why is it that I cant stop laughing when I read this part of the report? Maybe I imagine a Dawoodbhai writing scripts....);

(vii) “the proposed amendment to include principal director as author of a cinematograph film along with producer may create confusion and lead to uncalled for situations instead of serving the purpose intended for. The Committee's opinion rests on the premise that there is a system existing presently whereunder producers and directors are free to negotiate on their own terms and conditions”.

The reasons to say that a musical or literary work can only be assigned to the extent such work is used as part of the cinematograph film for communication to the public in a cinema hall (and as a corollary, all other rights of utilisation of the work are still vested with the music composer or lyricist at equal royalty sharing basis with the producer) are set out at pp. 26-28 and at p.33. The reasons are:

(i) Justice Krishna Iyer’s concurring judgment given in 1977, in a footnote, mentions that the interests of music composers and lyricists should be preserved in cases where the works are used separately from the cinematograph film, and the Amendment is only a late affirmation of this policy shift;

(ii) authors/composers are paid fee for creation of their works and not upfront guaranteed royalties. 

Based on these reasons, the Committee has even made the scope and intent of the amendment clearer by adding new provisos instead of the ones found in the Bill. The meaning of these provisos shall be dealt with in another post.

My point is that when it comes to sound recordings, the Committee has surprisingly not been concerned with the producer being the kingpin, or no liability / responsibility being shared by the music composer or lyricist. The Committee has ignored the payment of lumpsum amounts – a fact that they considered material while rejecting the principal director’s claims – and taken the view that the music composers and lyricists are entitled to even more royalties.

The Committee fails to note that not all directors are paid hefty lumpsum payments. The ratio is the same, or pretty much the same, when it comes to well-paid directors on the one hand and well-paid music composers and lyricists on the other. Then, how is it that the conclusion could be different on the ownership rights of either parties?

The international practise argument that the Committee uses conveniently to jettison the claims of principal directors finds no mention when it comes to the structure of the music industry. The music industry abroad does not have a particular genre called film music. Every kind of use of the music is licensed by the copyright society in which the music composer and his publisher are members, including the synchronisation rights for use of the music in a film, the reproduction rights for release of the song by a recording label, and the broadcasting rights for communicating the song to the public.

In India, on the other hand, the audio rights are purchased for hefty sums at huge risk by the recording label, from the producer. From that day onwards, the recording label is involved in a business tussle to first break even, and then recover some profit from the acquisition of the work. The general industry standard in this regard is that for every 10 acquisitions, 7 to 8 fail and 2 to 3 succeed in the marketplace. The music composer and the lyricist who take their lumpsum fee do not have to worry about this. So also the principal director since all losses have to be borne by the producer of the film. Then, why one set of norms for the principal director and another for the music composer / lyricist?

The Committee owes a better answer than the reasons reflected in its report. To my eyes, this is a clear violation of Article 14. The Committee has either failed to note the significance of the creative role played by the director in cutting the cinematograph film as we see it, or inflated the significance of the music composer or lyricist in making the sound recording a hit.

An Old Pharma Decision: Bombay high Court (1968) - II

In the last post, we stopped at the introduction to the issue of claim construction for infringement; to reiterate, the Bombay High Court stated that in determining infringement, a Court needs to construe the claims of the patent and claims alone, unless ambiguity in the language of the claims forces the Court to refer to the body of the specification. 

Claim Construction for Infringement

Keeping with the above view, the Court undertook construction of Claims 1, 11 and 22 of the plaintiff’s patent. The claims were as follows:

1. A process for the manufacture of sulphonylureas of the general formula R-SO. 2-NH-CO-NH-R. 1, in which R represents a phenyl radical which may contain one or two substitutes selected from alkyl and alkoxy residues, the alkyl group of which containing at most 8 Carbon atoms, and halogen atoms, or represents an alipahtic or cycloaliphatic Hydro-Carbon radical containing 3 to 8 Carbon radicals (as Dr. Aumuller has pointed out, the word "radicals" here is a mistake and should be "atoms") and R. 1 represents an aliphatic or cycloaliphatic Hydra-Carbon radical containing 2 to 8 Carbon atoms, and of the salts thereof, wherein compounds of the formula R - SO. 2.-X and Y-R.1 are reacted together in which X and Y are groups which on reaction together form a urea linkage as defined above or a linkage readily convertible thereto. 

11. A process as claimed in claim 1 wherein thioureas of the formula R-SO. 2-NH-CS-NH-R. 1 are treated with agents eliminating the sulphur, R and R. 1 having the meanings given above.

22. The compounds of the formula shown in Fig. 6 of the drawings, whenever obtained according to claims 1-15. 

If one were to construe Claim 1, it may be broken down thus:

A. The Claim is directed at a process for manufacture of sulphonylureas

B. The sulphonylureas so manufactured must be of the general formula R-SO. 2-NH-CO-NH-R. 1

C. The Claim further goes on to identify R and R1 as belonging to a particular group of compounds with limitation on the maximum number of carbon items that R and R1 each may have

D. The characterising portion of the Claim, which begins with “wherein”, states that the urea linkage defined in the introduction of the Claim is obtained by reacting R - SO. 2.-X and Y-R.1 together, or by directly converting the linkage so obtained from the reaction of the two constituents.

In other words, the product of the reaction between R - SO. 2.-X and Y-R.1 shall be suphonylurea of the general formula R-SO. 2-NH-CO-NH-R. 1 , or a thiourea which can be further directly  converted to a suphonylurea of the said general formula.

If this is accepted, it is clear that Claim 11 fell squarely under the second situation envisaged in Claim 1 since it spoke of desulphurisation of a thiourea of the formula R-SO. 2-NH-CS-NH-R. 1, using agents to eliminate sulphur. 

It is pertinent to point out here that neither Claim 1 nor Claim 11 restricted themselves to a specific thiourea, or a particular method of desulphurisation of thioureas or the agents used for desulphurisation. Consequently:

a.  so long as the thiourea, used as the base material for production of sulphonylurea, restricted itself to the general formula claimed in Claim 11,

b. with the groups R and R1 being delimited by the limitations set forth in Claim 1,

c. all such thioureas which could be desulphurised to yield, directly or indirectly, a sulphonyl urea of the formula mentioned in Claim 1, fell within the scope of the Plaintiffs’ patent.

The Court too took an identical view on construction of the claims. The Court further noted that there could be several compounds that could be manufactured using the process claimed in Claim 1; consequently, Tolbutamide was but one of the compounds which could be manufactured using the Plaintiffs’ patented process. 

It was admitted by the defendants in their written statement that they manufactured Tolbutamide by desulphurising substituted benzenesulphonyl-thioureas with hydrogen peroxide. The Court took the view, that although this process of the defendants may have been based on the licensed process claimed in IN 64323 of the Haffkine’s Institute, the process employed by the defendants must be deemed to have infringed the plaintiff’s patent in light of the Court’s construction of the plaintiffs’ claims. This was so, because nowhere did the plaintiff’s patent exclude use of hydrogen peroxide as a desulphurising agent.

Grounds of Invalidity of the Plaintiffs' Patent

The Court then proceeded to deal with the defence of invalidity of the patent raised by the defendants. The grounds raised to allege invalidity were:

(1) Insufficiency of description

 (2) Want of novelty

 (3) Lack of inventive step and

(4) Want of utility

A. Insufficiency of Description

Citing Halsbury, the Court observed thus:

“..the claim need only be as clear as the subject admits, and that a patentee need not so simplify his claim as to make it easy for infringers to evade it.”

Further, according to Halsbury:

“..the patentee's duty is not to prevent all possible argument as to whether there is or is not infringement in particular cases, but to enable the court to formulate the questions of fact to be answered”

Let’s try and understand the import of the above proposition because I am not really clear as to context of the application of the above proposition. Probably, (and I could be wrong here), what is sought to be conveyed is that, in a case of infringement, the patentee is not expected to provide answers to all possible counter-arguments, including those which have not been raised by the defendant in a particular suit. 

In other words, his only duty is to assist the Court in formulating questions of fact with respect to the dispute on hand, and not every possible issue which does not figure in the dispute on hand and which may be raised in future disputes. This, in my opinion, is relevant from a litigation point of view, because it requires the Court to cast only such duty upon the plaintiff/patentee as is necessary for resolution of issues in the suit, and not beyond.

On what a complete specification must contain to successfully survive the allegation of insufficiency, Halsbury says:

(1) the complete specification must describe "an embodiment" of the invention claimed in each of the claims and that the description must be sufficient to enable those in the industry concerned to carry it into effect "without their making further inventions"; and

(2) that the description must be fair i.e. it must not be unnecessarily difficult to follow.

In the instant case, the Court took the view that, since Claim 11 read with Claim 1 made it abundantly clear that all known methods of desulphurisation of thioureas would fall within the ambit of the claims, no further support from the specification was needed because there was no room for ambiguity.

Further, the claims must be understood, not so much as claiming a method of desulphurisation of thioureas, but primarily as claiming the method of synthesis of such sulphonylureas which have anti-diabetic properties. In other words, the crux of the patent lay in selecting such base material which upon further reaction generated the desired sulphonylurea, hence the limitation on the identity of the groups X, Y, R and R1 in the formula. (This throws up an interesting question, which will be taken up in another post)

Also, critically, the Court noted that it was not necessary for the patentee to describe processes which were common knowledge to the target audience of the patent- a highly-skilled group of practitioners of the relevant art. (This is another point of research...)

Finally, since as many as 40 examples had been provided in the specification to support Claim 1, the allegation of insufficiency of description, in the Court’s view, held no water.

The remaining grounds of invalidity shall be discussed in the next post.

An Old Pharma Decision: Bombay High Court (1968) - I

It is not often that one gets to read an Indian decision in a suit for patent infringement, where the Court has gone at length to apply principles of claim construction to the subject-matter of the patent (when the practice these days is to limit the “analysis” to mere regurgitation of case law on principles of grant of interim injunction...).

The decision I refer to is the one delivered by Justice Vimadalal of the High Court of Bombay in 1968 in the case of Farbewerke Hoechst & Bruning Corporation v. Unichem Laboratories & Ors (AIR 1969 Bom 255). The decision is a must-read for those interested in Indian patent litigation for several reasons, the first of which, as mentioned above, is clear elucidation of principles of claim construction by an Indian Court.

The second is the application by the Court of Section 114 of the Indian Evidence Act, 1872 to presume infringement of a process patent, in the absence of proof to the contrary.

And the third reason happens to be a happy coincidence for me; it just so happens that the counsels for both the Plaintiffs and the Defendants in the decision are now familiar names thanks to my recent reading of Mr.Fali Nariman’s autobiography “Before Memory Fades”, in which all the counsels in the matter and the Hon’ble Judge find more than just a passing mention.

This case also happens to be one of the precious few IP matters in which Mr. Thomas Anthony Blanco White, Queen’s Counsel and one of the best-known IP (particularly trademark) exponents of his time, appeared before an Indian Court. Given the quality of the counsels who appeared in the matter, it hardly comes as a surprise that the judgment makes for such an enlightening read.

Since the judgment is elaborate in its analysis, I shall discuss it over a series of posts to do justice to it (and to ensure I don’t bore readers to death with my constant droning...)

In a nutshell, following are the details of the patent of the Plaintiff/Appellant, Farbewerke:

Date of Filing: 23.10.1956 (dd/mm/yyyy)

Date of Acceptance/Grant: 07.11.1957 (Just over a year from the date of filing, record time!)

Patent Number: IN 58716

Invention: Manufacture of new sulphonyl-ureas, salts of those compounds and of anti-diabetic preparation containing such compounds

The plaintiff/patentee Farbewerke alleged infringement of its patent by the defendants' act of manufacture of “Tolbutamide”, an anti-diabetic drug which was claimed in Claims 1 and 11 of the plaintiff’s patent, and which the Plaintiffs had been selling internationally under the trademark “Rastinon”.

The defendants on their part claimed that the drug sold by them was indeed Tolbutamide, but was manufactured using a licensed process claimed in another Indian patent 64323 owned by the Haffkine Institute of Bombay (This was a time when there were no products patents for pharmaceutical substances under the erstwhile Indian Patents and Designs Act, 1911. In fact, under Section 2(8) of the Act, “invention” was defined as any manner of manufacture, including an improvement)

The defendants also claimed acquiescence and delay on the part of the plaintiffs because, although the latter were aware of manufacture of the drug in dispute by the defendants in March 1960, the suit for infringement was instituted only in April 1962.

Delay/Inaction by the Plaintiffs

The Court opted to first deal with the issue of acquiescence and delay; it took the view that delay may have come to the aid of the defendants had this been the interlocutory stage. Since the relief sought was that of perpetual injunction, mere delay would not deprive the plaintiffs of their right to secure a perpetual injunction. For that to happen, the defendants were required to establish that the delay/inaction had prejudiced the defendants significantly.

Since no such prejudice had been made out by the defendants in the instant case, the Court decided the issue of delay in favour of the plaintiffs/patentee.

Infringement- Burden and Onus

The defendants contended that since no evidence had been led to establish that the process employed by the defendants was indeed the patented process of the plaintiffs, no case of infringement of the plaintiffs’ patent had been made out.

To this, the Court drew inspiration from Section 41(2) of the Canadian Patent Act, which laid down that in an action for infringement where the invention relates to the production of a new substance, any substance of the same chemical composition and constitution shall, in the absence of proof to the contrary, be deemed to have been produced by the patented process which it is alleged to have infringed.

The Court observed that although there were no equivalent provisions in the then existing Indian Patents and Designs Act, it was available for the Court to apply the general provisions of Section 114 of the Indian Evidence Act, 1872, which in a way provided for reversal of burden of proof (reflected in Section 104A of the Patents Act, 1970 as it stands today).

Applying Section 106 of the Indian Evidence Act, the Court observed that since the process of manufacture of the defendants’ drug was within the “special knowledge” of the defendants, it was only proper that the defendants disclose the process of manufacture to counter the allegation of infringement.

Claim Construction

Specifically, the infringement alleged of in the case was of claims 1 and 11. On how a patent specification must be read in a case of infringement, the Court stated thus:

“It is, therefore, clear that, in an infringement action, the main function of the court is to construe the claims which are alleged to have been infringed, without reference to the body of the specification, and to refer to the body of the specification only if there is any ambiguity or difficulty in the construction of claims in question.”

As to how the Court meticulously went about understanding the science of the invention before forming an opinion on the issues in dispute, I’ll deal with in the next post...

Regulatory Approval-IP Linkage: Allahabad High Court’s Decision in 2007

IP aficionados in India must be familiar with the issue of regulatory-patent linkage which was the issue central to the Nexavar patent dispute between Bayer Corporation and Cipla. Prior to Bayer, Cipla and the Drug Controller General of India (DCGI) locking horns in 2009, two other lesser known Indian entities knocked the doors of the Allahabad High Court in 2007 on a similar issue.

Although the decision of the Allahabad High Court featured in the subsequent Bayer judgments of the Delhi High Court in 2009 and 2010, surprisingly the Allahabad decision itself did not get as much print-space in 2007 as one would have expected it to. Anyways, I guess it helps to keep one’s eyes and ears peeled to Courts other than the Delhi High Court too.

The decision of the Allahabad High Court was pronounced in a writ petition filed by "Cattle Remedies" against the licensing authority for Ayurvedic and Unani medicines. (For those who didn’t know, Ayurveda and Unani are referred to as “alternative forms” of medicine by practitioners of allopathy. That said, these indigenous forms of treatment are the main stay for large parts of rural India)

The co-respondent in the writ petition along with the licensing authority was Bio-herbs Pharma. Both the petitioner and the co-respondent were manufacturers of Ayurvedic and Unani medicines. The drugs over which the case was fought were Catone, Catcough and Uterotone (for improved digestion, common cold and increased “reproductivity” respectively).

A reading of the judgment tells one that this was one bitterly fought bare-knuckled battle over trademarks and regulatory licenses to these drugs. In a nutshell, both parties were granted regulatory licenses to manufacture the drugs, but the bone of contention was this- both parties wanted to sell the drugs under the same names and both claimed the same trademarks as well (assuming the “marks” were indeed marks permissible under the Trademarks Act, 1999).

Therefore, the issues in the petition before the Allahabad High Court were as follows:

1. What is the meaning of “patent or proprietary medicines” under Section 3(h) of the Drugs and Cosmetics Act, 1940 (“Drugs Act”)?

2. Did the 3 drugs in issue qualify as “patent or proprietary medicines” under Section 3(h) of the Drugs Act?

3. Does the Drugs Act mandate the grant of regulatory licenses only in the name of the brands/trade names of the drugs?

Before we proceed any further, it’s important to understand a few things about the framework of Drugs Act and here I quote the judgment:

“The Drugs Act is enacted to regulate import, manufacture, distribution, and sale of drugs and cosmetics. It not only prohibits sale of misbranded, adulterated, spurious and substandard drugs but also prohibits manufacture of any drug except under a licence granted under the Drugs Act. Broadly, it provides uniform control of distribution and manufacture of drugs. It ensures that the person manufacturing the drug has expertise and capability to manufacture drugs of the standard laid down in the Drugs Act.”

 The Drugs Act envisages two categories of drugs:

1.  the first that are called “patent or proprietary medicines”, and

2. the second that are non-proprietary medicines, which have been prepared based on formulations disclosed in the authoritative books of the Ayurvedic and Unani forms of medicine.

Each of these categories is governed by a set of conditions. Let’s start with the second category.

According to the Court, Non-proprietary medicines are those:

A. Which are manufactured exactly in accordance with the formulae prescribed in the authoritative texts of Ayurveda and Unani

B. Which strictly adhere to the texts with regard to the constituting ingredients of the medicines and the quantity in which such ingredients are to be used, and

C. Which must be sold under their generic names by all manufacturers, with only manufacturer’s name serving to distinguish one source from the other.

In other words, there can be no brand names or trade names for medicines which fall within the “non-proprietary category” under the Drugs Act.

Moving to “patent or proprietary” medicines, under Section 3(h) they are those:

A. Which shall use ingredients mentioned in the authoritative texts of Ayurveda and Unani

B. Which do not adhere to the formulations mentioned in the texts,

C. Which are not administered through the parenteral route, And

D. Which perforce have to be sold under different trade-names by different manufacturers

Application to the Facts of the case

The drugs in dispute in the case clearly fell under the category of “patent or proprietary” medicines since they did not replicate the formulations mentioned in the authoritative texts of alternative medicine. Further, the drugs manufactured by both parties differed in their formulations between themselves too. Therefore, both the petitioner and the respondent could not sell the drugs under the same name, for that would cause confusion to the public.

The Court acknowledged that both manufacturers could not use the same trademarks/brand names for their products. The Court then referred to Section 17B of the Drugs Act, which deals with “Spurious Drugs”.

The reason the Court discussed this provision is because Section 17B defines a spurious drug as one which resembles another drug in a manner which is likely to deceive the purchaser/consumer. Consequently, between the petitioner and the respondent, the one whose drugs resemble the other in a manner likely to deceive the public would be guilty of selling spurious drugs.

Referring to Sections 17B and 33EA of the Drugs Act, the Court observed thus:

“Though these sections do not use the word trademark, they say that a spurious drug is one that resembles another drug in a manner likely to deceive. We have already held that the disputed drugs manufactured by the parties are different. In case same names are given then there is likelihood of the persons being deceived. And a medicine that is patented under the Patents Act cannot be manufactured by anyone else except under a licence. In our opinion the licensing authority while granting licence to manufacture 'patent or proprietary medicine' under the Drugs Act should not grant licence in the trade name/mark of any other party.

 At the time of grant of licence, the licensing authority should consider the following two points:

(i) Whether the name is the trademark of anyone else or not, and

(ii) Whether the medicines are patented under the Patents Act or not?”

However, noting that existing requirements under the Drugs Act did not provide for verification of the above details by the licensing authority, the Court urged that the Rules under the Drugs Act be amended to provide for such particulars to be filled in by an applicant for a regulatory license. (This observation of the Court is surprising because it appears that until recently an applicant for a regulatory approval/license had to disclose the patent status of the drug)

In the specific facts of the case, the issue of ownership/prior use of the marks was not decided by the Court since it was not within the Court’s powers to do so in a writ petition. Consequently, bearing public interest in mind, the Court forbade both parties from using the trademarks/brand names until the issue of ownership of the marks was decided finally. 

New Contributor to the Blog: Mr.Ananth Padmanabhan

I take immense pleasure in announcing the addition of a contributor to the blog, Mr.Ananth Padmanabhan. Ananth is a product of NLSIU, Bangalore and is an independent practitioner before the High Court of Madras. His primary areas of interest are Copyright law and Constitutional law. Prior to going solo, Ananth read at the chambers of Mr.Arvind Datar, Senior Counsel in the Madras High Court, and before that stint, he was with a litigation firm in Bangalore. 

Ananth is currently handling the on-going copyright litigation before the Madras High Court for South Indian Music Companies Association (SIMCA). Ananth also teaches at the prestigious Bharatidasan Institute of Management, Trichy.

I welcome Ananth to the blog, and if his pithy columns in newspapers are anything to go by, our readers are in for an absolutely delightful literary treat!

Jurisdiction of Indian Courts over Non-registered Foreign Parties

In the last post, I discussed the issue of jurisdiction of Indian Courts on parties which do not have a registered place of business in India. There are enough and more Indian precedents on this point of law.

The first of which is the decision of the Karnataka High Court in Airbus Industries vs. Laura Howell Linton (ILR 1994 KAR 1370). This judgment is pretty informative for it traces the history of the term “forum shopping” and the evolution of principles of appropriateness of jurisdiction.

Among the various questions on jurisdiction that were dealt with in the judgment, the one that is of immediate relevance to this post is the issue of jurisdiction of Indian Courts over non-registered foreign parties. In finding a satisfactory answer to this issue, the K'taka Court cited another landmark judgment of the Bombay High Court in Chunnilal Kasturi Chand v. Dundappa Damappa (AIR 1951 Bombay 190)

An attempt was made in both these decisions to reconcile canons of International law with the demands of private law. Quoting another decision of the Patna High Court, the K’taka High Court in Airbus stated thus:

“...that according to the principles of International Law, a Court has no jurisdiction to entertain a suit against a foreigner who did not permanently or temporarily reside within its jurisdiction and who had not submitted to that jurisdiction. However, this is not the case where local Legislature confers jurisdiction upon a Court situated in a particular territory, to entertain suits against foreigners in situations where a cause of action arises wholly or partly within its jurisdiction, as in this instance. In such a case, the Rule of Private International law is subject to and over-ridden by the Rule of local Municipal Law.”

As deliberated in the last post, Clause (c) of Section 20 of the Code of Civil Procedure is the will of the Indian legislature which vests Indian Courts with the power to entertain suits against foreigners who do not reside in India, so long as a part or the whole of the cause of action has arisen in India.

Another brilliant judgment on this point is the one again delivered by the Patna High Court in Suresh Narain Sinha v. Akhauri Balbhadra (AIR 1957 Pat 256). The fundamental proposition which this judgment endorses is captured in Para 5 of this judgment, which reads as follows:

“In a personal action, to which none of these causes of jurisdiction apply, a decree pronounced in absentem by a foreign Court, to the jurisdiction of which the defendant has not in any way submitted himself, is by international law an absolute nullity. He is under no obligation of any kind to obey it; and it must be regarded as a mere nullity by the Courts of every nation except (when authorized by special local legislation) in the country of the forum by which it was pronounced.”

So, a plaintiff, who has an Indian patent, can take action in India for an infringement of his patent by an infringer who pull strings from outside India without a registered place of business in India.

(Image: High Court of Karnataka)

Can an Indian Court act against a Foreign Party in a Patent Infringement Suit?

I Wish All the Readers Merry Christmas!

In a recent suit for infringement of an Indian patent before the High Court of Delhi, the captioned issue featured prominently. The situation broadly is as follows:

1. The plaintiff has an Indian patent

2. The defendant is a foreign entity, with no registered place of business in India

3. Representatives of the defendant make concrete offers for sale of goods which infringe the plaintiff’s patent

4. Such representations are made within the territorial jurisdiction of the Delhi high Court

Question: Does the High Court of Delhi have the jurisdiction to entertain the plaintiff’s suit for infringement of his patent, when the defendant has no registered place of business in India?

For most general practitioners, the answer would be obvious. The High Court does have jurisdiction over the matter, notwithstanding the fact that the defendant has no registered place of business in India. This is because Section 104 of the Patents Act, 1970 directs us back to Section 20 of the CPC to ascertain the appropriate Court which would have jurisdiction over the suit.

Let’s take a look at Section 104, which reads thus:

104. Jurisdiction

No suit for a declaration under section 105 or for any relief under section 106 or for infringement of a patent shall be instituted in any court inferior to a district court having jurisdiction to try to suit:

Provided that where a counter-claim for revocation of the patent is made by the defendant, the suit, along with the counter-claim, shall be transferred to the High Court for decision.

To determine the district Court having the jurisdiction to try the suit, one has to look into the provisions of the Code of Civil Procedure, specifically Section 20 of the Code. Section 20 of the Code reads as follows:

20. Other suits to be instituted where defendants reside or cause of action arises.

Subject to the limitations aforesaid, every suit shall be instituted in Court within the local limits of whose jurisdiction-

(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or

(b) any of the defendants, where there are more than one, at the time of the commencement of the suit actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or

(c) the cause of action, wholly or in part, arises.

Why does the title of Section 20 read “Other suits to be instituted where defendants reside or cause of action arises”? This is because Sections 16-19 of the Code govern the jurisdiction of specific suits such as suit for immovable property and for compensation for wrongs to person or movables. “Other suits” in Section 20 refers to suits which do not fall within the ambit of Section 16-19.

Consequently, suits for causes of action which arise under any law in force, and which do not fall within the teeth of Section 16-19, are governed by Section 20 of the Code. This includes a suit for infringement of a patent (How?... why can’t a patent be treated as movable property? After all, section 50(5) of the Patents Act, 1970 states that the rules of law applicable to ownership and devolution of movable property generally shall apply in relation patents..)

Anyways, for the purpose of this post, I shall assume that a suit for infringement of a patent is covered as “other suits” under Section 20 of the Code.

A reading of Section 20 underscores the fact that the institution of a suit does not turn on nationality of the defendant. All that one needs to ask oneself is:

A. Does the defendant reside within the jurisdiction of the Court where the suit is sought to be instituted?

B. If not, does he have a place of business (by default, the place of business must be the sole or principal place of business. Refer to explanation provided in the Code to Section 20)

C. If he neither resides nor has a principal place of business within the jurisdiction of the Court, has the cause of action arisen within the jurisdiction of the Court?

Nowhere in any of these requirements under Section 20 does one find a hurdle to institution of a suit merely because the defendant does not have a registered place of business in India. Clause (c) of Section 20 clearly states that so long as the cause of action has arisen in whole or in part within the jurisdiction of a particular Court, the Court is the “competent court” as required by Section 15 of the Code (“Every suit shall be instituted in the Court of the lowest grade competent to try it”)

With regard to the specific factual matrix of the case being discussed here, the cause of action has arisen because “an offer for sale” of the patented product was made without the consent of the patentee.  (Section 48 of the Patents Act vests the patentee with the exclusive right to prevent third parties from offering for sale his patented product)

If the offer for sale was indeed made within the territorial jurisdiction of the High Court of Delhi, the infringement of the patent has occurred within the Court's jurisdiction. Therefore, the absence of a registered place of business of the defendant ought not to prevent the Court from entertaining the suit, because it is perfectly within its seisin.

P.S: For those who didn’t know, so long as the value of the suit is pegged at INR 200,000, the High Court of Delhi has original jurisdiction over the suit, which is the case with most suits for infringement of patent. Unless of course the patentee decides to value the suit below INR 200,000, in which case he would have to wait for the defendant to file a counterclaim of revocation of the patent, for the suit to be transferred along with the counterclaim from the district Court to the High Court (Courtesy proviso to Section 104 of the Patents Act) 

Internet Jurisdiction: UK Chancery Court Takes a Restrictive View- II

In the last post, I discussed this judgment of the UK Chancery Court; in particular, the issue of authorization was dealt with. In this post, the remaining highlights of the judgment have been discussed.

Role of the Parent Company in the Infringing act/Joint Liability

The Court recalled authorities/precedents to explain that joint tortfeasance/liability of the parent and the subsidiary companies would follow only if there was active participation on the part of both companies. Mere knowledge of one company of the other’s actions would not suffice to establish joint liability, even if the former had complete control over the assets and management of the latter.

Somehow this principle seems to erode the concept of vicarious liability because it doesn’t ring of conviction when a holding company conveniently claims innocence with respect to a particular questionable activity. I must admit I am not sure of the position under Indian law on this point.

In the instant case, the Court held that both the Swiss and German Defendants were jointly liable because the General terms and Conditions available on the websites of the Swiss Defendant showed that it was responsible for delivering products/services to customers in return for a consideration.

This, the Court felt, established the joint liability of both the defendant entities.

Good Arguable case of Copyright Infringement

The central issue to be decided on this point was if the Defendants’ actions would qualify as communication of the copyrighted content to members of the public i.e. “making available the work to the public” either by electronic transmission or wire/wireless means.

The Court wondered if it could draw parallels between the emission theory associated with satellite broadcasting, and online transmission. The emission theory, as applied to broadcasting, states that the place where the act of broadcast occurs is “where the signals are introduced under the control of the person making the broadcast into an uninterrupted chain of communication”.

In other words, the place where one puts information in a communication conduit is the place of broadcasting, as opposed to the place where the broadcast is received by the end consumer.  The Court seemed to endorse the view that the emission theory applied to satellite broadcasting and online transmission because it did not appear from the UK provision that the principle was applicable only to satellite broadcasting.

Further, the Court was of the view that even if it was within the power of the defendants to restrict access to the content in certain jurisdictions, the absence of any such restriction need not by itself imply that they intended to communicate the information in that jurisdiction. (How is it that this logic did not apply to the issue of authorization?)

The Court also observed that since online transmission of the infringing content could be curtailed within the UK, the application of the emission theory did not render the copyright useless.

In short, the Court held that the infringing act occurred only where the act of online transmission had been committed, which for the Court, was the place where the server was situated.

In light of the above, the following conclusions were reached by the Court:

1. The Court did not have jurisdiction against the foreign defendants since the server of the defendants was located outside the UK, and hence there was no primary infringement by communication by the foreign defendants

2. Since the UK-based entities had not been impleaded, claims had to be amended accordingly for the court to take cognizance of the infringing activities of the UK-based entities.

Observations

The judgment doesn’t appear consistent or coherent because the Court takes the view that:

A. The foreign defendants had authorised reproduction of the infringing content, and yet the Court does not elaborate as to where and how was such authorisation established.

B. Then it proceeds to accept that there was joint liability of the foreign defendants with the UK-based customers for reproduction, extraction and re-utilization.

C. However, since the server of the foreign defendants was outside the UK, there was no communication to the public by the foreign defendants.

Since joint liability of the foreign defendants with UK-based customers for reproduction is another way of stating “authorization of reproduction”, I think the issue hasn't been addressed satisfactorily because the underlying premise of  authorization hasn’t been sufficiently dwelt upon by the Court.

As for the issue of “communication”, communication or transmission, as understood in common parlance, are acts which are not and cannot be termed successful if the information so communicated or transmitted is not received by the recipient. Stated otherwise, there is no complete communication without reception. Accordingly, in this case, since communication to UK-based customers was complete, the foreign defendants ought to have been held as communicating the copyrighted content.

That said, does communication without a specific concerted attempt to cater to customers in the UK, amount to communication to the UK public? If the answer is in the negative, then communication is only by the UK-based entities, and not by the foreign defendants.

What I mean is that since there is no proof to show that the foreign defendants intended to communicate the infringing content to users in the UK, it is the UK-based entities which have themselves ensured the communication of the content to users in the UK by linking to the German website. Therefore, the liability for infringement by communication falls on the UK-based entities, and not on the foreign defendants.

All in all, one is of the opinion that the judgment does not strike a consistent note on the line of logic it adopts to arrive at a decision on both issues of authorization and communication.

Comments/alternative views on the judgment are welcome.